Western Liberty Bancorp, Inc. (NASDAQ: WLBC), the holding
company for Service1st Bank of Nevada (Service1st Bank) and Las
Vegas Sunset Properties (LVSP), today reported its tangible book
value per share increased to $5.60 from $5.54 in the prior quarter.
Western Liberty also reported it lost $14.2 million, or $0.96 per
share, in 2011, following an $8.7 million provision for loan losses
for the year and a third quarter non-cash charge of $5.6 million
for goodwill impairment which was partially offset by the $1.8
million reduction in the fair value of the contingent consideration
liability related to the Service1st acquisition. All financial
results for 2011 are unaudited.
For the fourth quarter of 2011, the net loss totaled $2.4
million, or $0.17 per share, which includes a $1.3 million
provision for loan losses. Before the acquisition of Service1st
Bank on October 28, 2010, Western Liberty had no operating entity.
Consequently the comparisons for the year ago periods, reflect only
two months of operations of Service1st Bank.
“To expedite the resolution of nonperforming assets, we formed a
new wholly-owned subsidiary, Las Vegas Sunset Properties (LVSP),
and transferred $4.0 million in foreclosed properties into LVSP
from Service1st Bank in the fourth quarter of 2011,” said William
Martin, Chief Executive Officer. “In January, we also moved $11.5
million in nonperforming loans (NPLs) to LVSP. Following the
January transfer of NPLs, the Bank’s ratio of classified assets to
Tier 1 capital plus reserves improved to 48.4%.
“With our extremely strong capital levels, we repurchased
934,987 shares during the fourth quarter at an average cost of
$2.34 per share, bringing total shares repurchased during the
second half of the year to 1.6 million at an average cost of $2.59
per share,” Martin continued.
“While the national and local economic indicators are starting
to improve, we are continuing to see asset quality decline,
although at a slower pace than in past quarters,” said Patricia
Ochal, Chief Financial Officer. Nonaccrual loans increased to $24.1
million, of which $15.9 million are loans that have been modified
or restructured. During the year, these troubled debt restructured
(TDR) loans were written down to $14.6 million from $20.0 million,
and $1.9 million of the TDR’s are paying on time. “As a result of
the decline in asset quality, we are increasing our allowance for
loan losses, which was eliminated last year under fair value
accounting standards during the merger. Consequently, the allowance
for loans losses is now 2.85% of total portfolio loans.”
Financial Highlights (at or for the quarter ended
December 31, 2011)
- Service1st Bank has exceptionally
strong capital ratios with Tier 1 Capital/Total risk-weighted
assets of 28.4%.
- Western Liberty also has exceptionally
strong capital ratios with Tier 1 Capital/Total risk-weighted
assets of 70.4%.
- Tangible book value increased to $5.60
per share, based on 13,466,535 shares outstanding.
- Total cash and cash equivalents held by
Western Liberty is $89.4 million, of which $29.3 million is at the
holding company level and $12.9 million is at LVSP.
- Noninterest bearing deposits accounted
for 42% of total deposits and core deposits (excluding time
certificates of $100,000 or more) are 78% of total deposits.
- Western Liberty repurchased 1,574,400
shares at an average cost of $2.59 as of December 31, 2011.
Nevada Economic Update
“As shown below, a variety of measures show that Nevada economic
activity began a slow recovery in 2011,” said Stephen P. A. Brown,
PhD, Director, Center for Business and Economic Research at the
University of Nevada, Las Vegas in his January 25th Economic
Outlook. “The Nevada economy should continue to see improvement in
2012 and 2013. The gains will be stronger in the second half of
2012 than in the first, and the gains in 2013 will be stronger than
in 2012.”
Nevada Economic Indicators (percent change) 2010
2011 2012
2013 So. Nevada Visitor Volume
2.7 % 4.8 % 5.1 % 5.3 % NV Gross Gaming Revenue 1.0 % 2.9 % 4.3 %
4.5 % So. Nevada Hotel Rooms 0.0 % 0.7 % -0.1 % 0.2 % NV Population
0.5 % 0.2 % 0.8 % 1.2 % NV Employment -2.8 % 0.1 % 1.0 % 1.5 % NV
Unemployment Rate* 14.9 % 12.6 % 11.9 % 9.6 % NV Personal Income
1.8 % 3.9 % 4.2 % 4.5 % NV Housing Permits 15.2 % -9.4 % 3.8 % 5.0
% Note: *Unemployment rate in December.
Sources: Las Vegas Convention and Visitors
Authority; State of Nevada Gaming Control Board; Nevada State
Demographer; Nevada Department of Employment, Training and
Rehabilitation; Federal Reserve Bank of St. Louis; Center for
Business and Economic Research, UNLV.
“To sum it up, the Nevada economy has begun a long-awaited
recovery,” Brown continued. “Because the Nevada economy is heavily
dependent on tourism, its outlook is tied to the growth of the U.S.
and western states’ economies. Nevada cannot look to real estate
for its economic growth right now. Diversification will pay
dividends in the future.
“We are already seeing a recovery in tourism — particularly in
Southern Nevada. Continued gains can be expected to continue into
2012 and 2013. The national economy is on a path for a gradual
acceleration of economic growth over the next few years. As the
recoveries in the United States and western states’ economies
advance, they will further stimulate Southern Nevada tourism.”
Additional reports on the Nevada economy can be found on the
CBER website, which can be found at http://cber.unlv.edu. Sources:
http://business.unlv.edu/wp-content/uploads/2011/03/CBERonNevadaEconomy-Jan2012.pdf
Balance Sheet Review
Western Liberty’s total assets declined 4% to $198.3 million at
December 31, 2011, from $206.1 million at September 30, 2011, and
fell 23% from $257.5 million from a year ago. Total loans were
$101.9 million at December 31, 2011, compared to $101.8 million at
September 30, 2011, and $106.3 million at December 31, 2010.
Commercial real estate loans accounted for 57% and commercial and
industrial loans comprised 35% of the loan portfolio. Construction
and land development loans accounted for 3% and residential real
estate loans were 5% of total loans at year end. Of the total loan
portfolio, 65% is secured by real estate and 32% of the commercial
real estate loan portfolio is owner occupied. Half of the loan
portfolio is adjustable rate loans, with most of these loans
indexed to the national prime rate with interest rate floors above
the current prime rate index.
Western Liberty’s deposits totaled $121.2 million at December
31, 2011, with 42% in noninterest bearing demand accounts. At
September 30, 2011, total deposits were $124.8 million, compared to
$160.3 million at December 31, 2010. “Our core deposit base
continues to be almost completely local deposits, with no brokered
or internet funding in the mix,” said Martin.
“We had two nonrecurring balance sheet adjustments, one asset
and one liability, that significantly impacted the income statement
this year,” said Ochal. “Based on the current economic climate, our
overall performance, and the market value of our shares, we
determined that it was appropriate to completely write down the
$5.6 million of goodwill carried on our balance sheet. In addition,
we eliminated the contingent liability associated with the merger,
generating noninterest income of $1.8 million.”
Total shares outstanding were 13.5 million at year end
reflecting the recent share repurchase program. Shareholders’
equity was $76.0 million at the end of December compared to $80.7
million at the end of September and $93.8 million at the end of
December 2010. Tangible book value per share was $5.60 at year end
from $5.54 in the preceding quarter and $5.79 a year ago.
Asset Quality
Nonperforming assets totaled $28.1 million, or 14.2% of total
assets at December 31, 2011, compared to $23.0 million, or 11.2% of
total assets at September 30, 2011, and $13.8 million, or 5.4% of
total assets at December 30, 2010. Loans measured for impairment,
which include nonperforming loans as well as loans that continue to
perform but have some identified weakness, totaled $26.3 million,
or 25.8% of the loan portfolio.
Activity in the allowance for loan losses was as follows:
Allowance for Loan Losses ($ in 000s) unaudited Commercial
CommercialRE
ResidentialRE
Consumer
Construction /Land
Total Beginning Balance 12/31/2010 36 - - - - 36 Provision 3,901
4,293 15 - 508 8,717 Recoveries 268 2 4 - 300 574 Loan Charge-offs
(1,935 ) (3,873 ) -
- (600 )
(6,408 ) Ending Balance 12/31/2011 2,270
422 19
- 208 2,919
Review of Operations
Net interest income, before the provision for loan losses,
increased 20% to $1.8 million in the fourth quarter of 2011, from
$1.5 million in the preceding quarter. For the full year, net
interest income, before the provision for loan losses was $9.0
million compared to $1.4 million in 2010. The increase in net
interest income in 2011 is primarily a result of having only two
months of operations for 2010. Discount accretion contributed $3.6
million to interest income in 2011 compared to $436,000 in
2010.
Western Liberty’s provision for loan losses was $1.3 million for
the fourth quarter of 2011, compared to $1.7 million in the third
quarter of 2011. Provision for loan losses was $8.7 million for the
year ended December 31, 2011.
During the fourth quarter other operating income was $117,000
and $2.4 million in the full year of 2011, which included the $1.8
million in contingent consideration liability reduction.
Noninterest expense for the fourth quarter of 2011 declined to $3.0
million from $8.7 million, which included the $5.6 million goodwill
impairment charge in the third quarter of 2011. For the year,
noninterest expense was $16.9 million compared to $9.1 million in
2010, which only included two months of operations.
In addition, the bank recorded a $111,000 impairment on its
other real estate owned (OREO) during the fourth quarter of
2011.
About Western Liberty Bancorp
Western Liberty Bancorp is a Nevada bank holding company which
conducts operations through Service1st Bank of Nevada, its
wholly-owned banking subsidiary, and its newly created wholly-owned
subsidiary Las Vegas Sunset Properties. Service1st Bank operates as
a traditional community bank and provides a full range of deposit,
lending and other banking services to locally-owned businesses,
professional firms, individuals and other customers from its
headquarters and two retail banking facilities located in the
greater Las Vegas area. Services provided include basic commercial
and consumer depository services, commercial working capital and
equipment loans, commercial real estate loans, and other
traditional commercial banking services. Primarily all of the
bank’s business is generated in the Nevada market.
www.wlbancorp.com
FORWARD LOOKING STATEMENTS
This release may contain “forward-looking statements” that are
subject to risks and uncertainties. Readers should not place undue
reliance on forward-looking statements, which reflect management’s
views only as of the date hereof. All statements, other than
statements of historical fact, regarding our financial position,
business strategy and management’s plans and objectives for future
operations are forward-looking statements. When used in this
report, the words “anticipate,” “believe,” “estimate,” “expect,”
and “intend” and words or phrases of similar meaning, as they
relate to Western Liberty or management, are intended to help
identify forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Although we
believe that management’s expectations as reflected in
forward-looking statements are reasonable, we cannot assure readers
that those expectations will prove to be correct. Forward-looking
statements are subject to various risks and uncertainties that may
cause our actual results to differ materially and adversely from
our expectations as indicated in the forward-looking statements.
These risks and uncertainties include our ability to maintain or
expand our market share or net interest margins, and to implement
our marketing and growth strategies. Further, actual results may be
affected by our ability to compete on price and other factors with
other financial institutions; customer acceptance of new products
and services; the regulatory environment in which we operate; and
general trends in the local, regional and national banking industry
and economy, as those factors relate to our cost of funds and
return on assets. In addition, there are risks inherent in the
banking industry relating to collectability of loans and changes in
interest rates. Many of these risks, as well as other risks that
may have a material adverse impact on our operations and business,
are identified in our other filings with the SEC. However, you
should be aware that these factors are not an exhaustive list, and
you should not assume these are the only factors that may cause our
actual results to differ from our expectations.
Selected
Consolidated Financial Highlights
(Dollars in thousands, except per share data)
December 31,
September 30, June 30, March 31, December
31, (Unaudited)
2011 2011 2011 2011
2010 Per Share data: Book Value $ 5.65 $ 5.58 $ 5.91
$ 6.21 $ 6.22 Tangible Book Value $ 5.60 $ 5.54 $ 5.48 $ 5.78 $
5.79
Selected Balance Sheet Data: Total Assets $
198,290 $ 206,140 $ 223,343 $ 228,791 $ 257,546 Cash and cash
equivalents 89,353 95,004 103,426 90,443 103,227 Gross loans,
including net deferred loan costs 101,861 101,776 101,533 102,207
106,259 Allowance for loan losses 2,919 3,005 4,404 1,290 36
Deposits 121,226 124,783 131,585 131,813 160,286 Stockholders'
equity 76,041 80,673 89,099 93,558 93,829
Capital
Ratios: Tier 1 equity to average assets 25.70 % 28.40 % 31.40 %
33.00 % 30.50 % Tier 1 Risk-Based Capital ratio 70.37 % 73.60 %
70.10 % 70.60 % 68.40 % Total Risk-Based Capital ratio 71.59 %
74.80 % 71.30 % 71.70 % 68.80 %
Consolidated
Balance Sheet
(Dollars in thousands, except per share
data) (Unaudited) December 31, September 30, December 31,
2011 2011 2010 Assets: Cash and due from banks
$ 11,227 $ 4,815 $ 11,675 Money market funds 100 100 52,206
Interest-bearing deposits in banks 78,026
90,089 39,346 Cash and cash equivalents 89,353
95,004 103,227 Certificates of deposits - 246 26,889
Securities, available for sale 472 773 1,819 Securities, held to
maturity 2,031 3,631 5,314 Loans: Construction, land development
and other land 3,417 3,582 5,923 Commercial real estate 58,252
52,058 54,975 Residential real estate 4,704 4,674 9,247 Commercial
and industrial 35,417 41,373 35,946 Consumer 30 69 131 Plus: net
deferred loan costs 41 20 37
Total loans 101,861 101,776 106,259 Less: allowance for loan
losses (2,919 ) (3,005 ) (36 ) Net loans
98,942 98,771 106,223 Premises and equipment, net 818 927 1,228
Other real estate owned, net 4,008 4,119 3,406 Goodwill, net - -
5,633 Other intangibles, net 670 695 768 Accrued interest
receivable and other assets 1,996 1,974
3,039 Total assets $ 198,290 $ 206,140
$ 257,546 Liabilities: Demand deposits, noninterest
bearing $ 50,488 $ 52,770 $ 67,087 NOW and money market 37,306
32,301 56,509 Savings deposits 735 599 1,273 Time deposits $100,000
or more 26,479 31,926 30,498 Other time deposits 6,218
7,187 4,919 Total deposits
121,226 124,783 160,286 Contingent consideration - - 1,816 Accrued
interest and other liabilities 1,023 684
1,615 Total liabilities 122,249 125,467
163,717 Shareholders' Equity: Common stock 1 1 1 Additional
paid-in capital 117,846 117,728 117,317 Accumulated deficit (37,717
) (35,361 ) (23,489 ) Treasury stock (4,094 ) (1,696 ) -
Accumulated other comprehensive gain/(loss), net 5
1 -
Total shareholders' equity 76,041 80,673
93,829 Total liabilities and stockholders’
equity
$
198,290
$ 206,140 $ 257,546
Consolidated
Income Statement
(Dollars in thousands, except per share data) Three Months Ended
Twelve Months Ended (Unaudited) December 31, September 30, June 30,
March 31, December 31, 2011 2011 2011
2011 2011 Interest Income: Interest and fees on loans $ 1,866 $
1,587 $ 2,018 $ 3,782 $ 9,253 Interest on securities, taxable and
other 66 60 68 66
260 Total interest and dividend income 1,932
1,647 2,086 3,848 9,513 Interest Expense: Interest expense on
deposits 122 123 127
112 484 Net interest income 1,810 1,524
1,959 3,736 9,029 Provision for loan losses 1,287
1,718 4,348 1,364
8,717 Net interest income (loss) after provision for loan
losses 523 (194 ) (2,389 ) 2,372 312 Other Operating Income:
Service charges 69 77 78 78 302 Contingent consideration recovery 0
1,816 - - 1,816 Other 48 84 114
43 289 Total other operating
income 117 1,977 192 121 2,407 Other Operating Expense:
Salaries and employee benefits 861 823 765 793 3,242 Occupancy,
equipment and depreciation 377 365 374 374 1,490 Computer service
charges 72 71 74 77 294 Federal deposit insurance 132 111 129 152
524 Legal and professional fees 837 341 520 936 2,634 Advertising
and business development 12 17 48 20 97 Insurance 73 73 67 71 284
Telephone 19 19 17 26 81 Printing and supplies 24 30 87 142 283
Director fees 76 51 49 49 225 Stock-based compensation 119 131 138
141 529 Provision for unfunded commitments 31 48 (203 ) (133 ) (257
)
OREO property impairment
111 686 - - 797 Goodwill impairment 0 5,633 - - 5,633 Other
252 251 334 254
1,091 Total other operating expense 2,996
8,650 2,399 2,902
16,947 Net loss $ (2,356 ) $ (6,867 ) $ (4,596 ) $
(409 ) $ (14,228 ) Basic EPS $ (0.17 ) $ (0.46 ) $ (0.30 ) $
(0.03 ) $ (0.96 ) Diluted EPS $ (0.17 ) $ (0.46 ) $ (0.30 ) $ (0.03
) $ (0.96 ) Average basic shares 14,278,467 15,058,383 15,088,023
15,088,023 14,878,224 Average diluted shares 14,278,467 15,058,383
15,088,023 15,088,023 14,878,224
-0-
Note Transmitted on Business Wire on February 13, 2012, at
5:30a.m. Pacific Standard Time.
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